19 August 2024

💬 “The two greatest enemies of the equity fund investor are expenses and emotions.” John C. Bogle

ANALYST STOCK PICKS
Buffet and Burry moves revealed.

Some of the most prominent U.S. investors have unveiled their stock transactions from the past three months. These disclosures came through 13-F filings, which U.S. funds with assets exceeding $100 million are required to submit each quarter to the Securities and Exchange Commission.

Michael Burry, the guy played by Christian Bale in The Big Short, filed for his Scion Asset Management fund. Here's a breakdown:

So he's been doubling down on Chinese stocks, adding 30,000 shares of Alibaba, bringing it to $11.2 million.

Burry also looks like he is restructuring a bit, taking new positions across multiple industries, including financial services, healthcare, and commercial real estate. Notable new stakes include investments in Shift4 Payments, Molina Healthcare Inc., and Hudson Pacific Properties Inc., each valued at over $5.5 million. The firm also expanded its portfolio with new positions in Olaplex Holdings Inc. and BioAtla Inc.

Warren Buffet has also posted Berkshire Hathaway's holdings:

While Apple is still his top holding, he has reduced his position by a massive 50%. He has also unloaded nearly $1 billion in cloud company Snowflake. This leaves Berkshire with a cash pile of $227 billion. It's very possible that he could be anticipating prices will drop soon.

However, he did spot some opportunities that he liked, most notably Ulta Beauty and aerospace manufacturer Heico.

Bill Ackman’s Pershing Square filed a return which showed new stakes in Nike and Brookfield while cutting Chipotle Mexican Grill by 23 percent. Nike has seen its share price fall nearly 22% year to date, and Ackman may see this as a buying opportunity. If you're wondering what has gone wrong at Nike, Massimo Guinco wrote a masterly long-read breakdown of what's been going wrong at the company.

Outside of 13-F filings, there were a few interesting analyst calls:

Robinhood was described as having "exceptionally attractive" growth potential by Deutsche Bank. They set a price target of $24 for the stock, representing a 20% upside over its current value and upgraded it to a Buy. They see both near- and long-term growth driven by solid revenue growth and solid cost control. They also think the company could become less dependent on cryptocurrency, with growth in equities, options, and general investing.

Piper Sandler also upgraded it to a $24 price target, while Cathie Wood also bought 46,000 shares in the company last week.

Sportradar, the sports betting technology company, was upgraded by Jefferies to a Buy with a price target of $16, representing a 45% upside over its current value. They say it has made "notable progress" in demonstrating the durability of its business model. The prediction is also grounded in the projection that the industry will grow by more than 30% and that Sportradar will outpace the industry through 2025 and beyond.

Starbucks was upgraded by several firms on its appointment of new CEO Brian Niccol, who comes over from Chipotle. Its share price has already jumped 24% on the news, but Evercore ISI thinks it could go as high as $120, up from $94 currently.

PRESS STOCK TIPS
Barron’s thinks Airbnb is a Buy.

Airbnb has had a tough couple of weeks. Disappointing third-quarter guidance caused its shares to drop 10% to $115 - just over half its peak in 2021. Most Wall Street analysts are giving it a Neutral or Sell rating, but Barron’s thinks it’s a good time to buy the Airbnb dip.

Key to this is that Airbnb continues to lead the short-term rental market with eight million active listings and significant annual gross bookings and sales. This dominance is seen as a solid foundation for future growth.

Additionally, CEO Brian Chesky's plans to expand beyond Airbnb's core business into travel experiences, sponsored listings, a loyalty program, and a property-management business are highlighted as potential growth areas. These initiatives are expected to enhance the company's offerings and revenue streams.

Plus, there’s plenty of space for Airbnb to expand into, with most of its current business being focused on the U.S., France, the U.K., Australia, and Canada.

Barron’s isn’t ignoring Airbnb’s balance sheet either:

Barron’s also thinks Chesky’s status as a founder-CEO is an asset, as is the fact it attracts 90% direct traffic to its website, underscoring its brand recognition and reducing costs.

Despite the recent price drop, Airbnb's stock is viewed as attractively priced, trading at lower multiples relative to its earnings potential. The company's aggressive stock repurchase program, totalling $1.5 billion so far this year, underscores its confidence in the stock's value.

THE WEEK AHEAD
Coachella for economists.

This week all eyes will be on Jackson Hole, Wyoming as the Federal Reserve Bank of Kansas City hosts its annual economic shindig. Global central bankers, academics and key movers and shakers gather for the “Coachella for economists”. Most importantly, Fed Chair Jerome Powell will lay out his roadmap for interest rates and investors are expecting hints that a September cut is on the cards.

The calendar.

Monday: Earnings: Estée Lauder, Palo Alto Networks.

Tuesday: Earnings: Medtronic, XPeng.

Wednesday: Fed minutes. Earnings: Snowflake, Synopsis, Zoom.

Thursday: German manufacturing PMI (August), the Jackson Hole Economic Symposium begins. Earnings: Baidu, Intuit.

Friday: Japan inflation (July), the Fed chair speaks in Jackson Hole, Bank of Japan’s governor testifies to Japan’s parliament.